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Americans Finally Realize GOP Handling Debt Debate Poorly

And the loser is… the GOP!

Or so says the latest CBS poll showing 71 percent of Americans don’t like the GOP’s handling of the debt crisis. And why would they? Americans have shown in polls, time and time again, that they want both sides, Democrat and Republican, to work together to get business done in Washington. To get the business of raising the debt ceiling done, that takes compromise; a word I fear Republicans don’t like or perhaps aren’t that familiar with. A great man once told me the best negotiations are when both parties leave the room winning and losing. The president has shown his ability to compromise; he put cuts to Medicare and Social Security on the table. Heck, he’s even willing to talk about cuts rather than just raising the debt ceiling on his own!

To read the polls is not only confusing, but it shows how confused we the people are. Some polls show Americans want to cut spending, but they don’t want to raise taxes. Other polls show a majority of Americans want the Bush tax credits to end for the wealthy. And after Rep. Paul Ryan put forth his machete to Medicare, he was booed at town hall meetings, and a Democrat won a congressional seat in a district which had been a Republican stronghold for decades.

This current proposal by Republicans is not a GOP plan, it’s a Tea Party debt plan, appealing to the overwhelming minority of their base, obviously pandering to the “Teapublicans” for their cash for the upcoming election.

It sickens me when I hear the GOP talk about leaving something for our children and future generations when their proposals cut more education and Medicare and Social Security, making those programs a memory for our children. And without them, our children will be financially strapped, taking care of sick and elderly parents and grandparents.

These poll numbers show the GOP cannot even convince their own party of what they’re doing, which is obviously playing politics and puffing their chests out like chicken hawks, trying desperately not to blink first in this game. And for all their talk about the Democrats’ scare tactics, the poll shows the majority feel the president raises valid concerns if the debt ceiling is not lifted.

My favorite president, and a man who I think is the most intelligent of all of them (maybe not in choices he made in his personal life), is Bill Clinton. President Clinton says he would raise the debt ceiling using powers granted under the 14th Amendment—“validity of the public debt shall not be questioned…”

Maybe it’s time President Obama took a page from the Clinton handbook and took his advice. After all, he was a constitutional lawyer. If President Obama stops the economy from going into a double dip recession by raising the debt ceiling, he’ll not only be re-elected, he’ll show America that the GOP are the losers, and prevent the American people from being so—which is what would happen if he signed that GOP plan into law.

 

By: Leslie Marshall, U. S. News and World Report, July 20, 2011

July 20, 2011 Posted by | Congress, Conservatives, Constitution, Debt Ceiling, Deficits, Democracy, Democrats, Economic Recovery, Economy, Elections, Federal Budget, GOP, Government, Government Shut Down, Ideologues, Ideology, Lawmakers, Medicare, Politics, President Obama, Public, Public Opinion, Republicans, Right Wing, Social Security, Taxes, Tea Party, Voters | , , , , , , | Leave a comment

A Politician-Created Crisis: Why Did Congress Waste Six Months?

The House Republican strategy to link a normally routine increase in the nation’s debt limit with a crusade to slash spending has already had a high cost, threatening the nation’s credit rating and making the United States look dysfunctional and incompetent to the rest of the world.

But that’s not the most awful thing about it.

What’s even worse is that this entirely artificial, politician-created crisis has kept government from doing what taxpayers expect it to do: Solve the problems citizens care about.

The most obvious problem is unemployment. The best way, short term, to drive the deficit down is to spur growth and get Americans back to work. Has anyone noticed that Americans with jobs can provide for their families, put money into the economy — and, oh yes, pay taxes that increase revenue and thus cut the deficit?

There is no mystery about the steps government could take. Ramping up public works spending is a twofer: It creates jobs upfront and provides the nation’s businesses and workers the ways and means to boost their own productivity down the road.

Wise infrastructure spending can save energy. And when public works investments are part of metropolitan plans for smarter growth, they can also ease congestion and reduce commuter times, giving our citizens back valuable minutes or hours they waste in traffic. If you want a pro-family policy, this is it.

State and local budgets all across the country are a shambles. Teachers, police, firefighters, librarians and other public servants are being laid off. As the New York Times’ David Leonhardt pointed out recently, even as the private economy has been adding jobs, if too slowly, state and local governments have hemorrhaged about half a million jobs in two years.

President Obama knows this. “As we’ve seen that federal support for states diminish, you’ve seen the biggest job losses in the public sector,” he said in his July 11 news conference. “So my strong preference would be for us to figure out ways that we can continue to provide help across the board.”

So why not do it? “I’m operating within some political constraints here,” Obama explained, “because whatever I do has to go through the House of Representatives.”

Excuse me, Mr. President, but if you believe in this policy, why not propose it and fight for it? Leadership on jobs is your central job right now. Let the Republicans explain why they want more cops and teachers let go, or local taxes to rise.

We should also extend the payroll tax reduction instituted last year and unemployment insurance. Why so little discussion of how balky Republicans have been on this Obama tax cut proposal, or how resistant they have been to further help those out of work? They won’t raise taxes on the rich to balance the budget but are utterly bored by relief for the middle class or the jobless. Isn’t that instructive?

And while we have been parsing the Rube Goldberg complexities of Senate Republican leader Mitch McConnell’s procedural contortions to get us out of a battle we should never have gotten into, we haven’t been discussing how to reform the No Child Left Behind law.

It’s true that some good people in Congress are trying to figure out a way forward on education reform. That’s a far more important national conversation than whether Tea Party Republicans understand the elementary laws of economics. But you wouldn’t know it because those who care about the substance of governing never get into the media. You get a lot of attention — and are sometimes proclaimed a hero — if you say something really dumb about the debt ceiling.

Then there is the coming debate over a “balanced budget” amendment to the Constitution that would limit government spending to 18 percent of gross domestic product and require a two-thirds vote to raise taxes. It’s an outrageous way for members of Congress to vote to slash Medicare, Medicaid, Social Security, aid to education and a slew of other things, to lock in low taxes on the rich — and never have to admit they’re doing it. It’s one of the most dishonest proposals ever to come before Congress, and I realize that’s saying something.

Every member of Congress who got us into this debt-ceiling fight should be docked six months’ pay. They wasted our time on political posturing instead of solving problems. Better yet, the voters might ponder firing them next year. This could do wonders for national productivity.

By: E. J. Dionne, Opinion Writer, The Washington Post, July 17, 2011

July 18, 2011 Posted by | Budget, Businesses, Congress, Conservatives, Constitution, Debt Ceiling, Deficits, Economic Recovery, Economy, GOP, Government, Government Shut Down, Ideologues, Ideology, Jobs, Lawmakers, Politics, President Obama, Public, Public Employees, Republicans, Right Wing, States, Tax Loopholes, Taxes, Unemployment | , , , , , , , | Leave a comment

How Default Would Harm Homeowners, Cities, Businesses And Everyone Else

It’s easy to understand why the government will have more trouble borrowing if it fails to pay its debts, or even has a difficult time paying its debts. It’s a bit harder to see why ordinary Americans, the city of Pittsburgh, hospitals in Iowa, and medium-sized corporations will have more trouble borrowing. But they will. And their trouble borrowing is the main channels through which a default, or even something too close to it for the market’s comfort, could deal a body blow to the economy.

On Wednesday, Moody’s warned that it was putting the U.S. government credit rating on review for a downgrade. But they didn’t stop there. Another 7,000 debt products that are “directly linked to the U.S. government or are otherwise vulnerable to sovereign risk” were also put on review for a possible downgrade. That’s about $130 billion worth of debt. If America tumbles, so do they. But Moody’s still wasn’t done. An unknown amount of “indirectly linked” debt is also getting reviewed.

If America’s credit rating falls, it’s taking a lot more than just Treasury securities with it. It’s going to take the whole credit market with it. Which, as you’ll remember, is exactly how the subprime housing sector took the economy down in 2008.

The first to fall will be “directly linked” debt. These are bonds that rely on payments from the federal government. Naomi Richman, a managing director in Moody’s Public Finance division, puts it bluntly: “There are certain kinds of municipal bonds that are directly reliant on Treasury paying or some other direct payment,” she says. “If those bonds don’t receive their payment, they have no other source of revenue.” So down they go.

Then there’s the “indirectly linked” debt. That’s debt from state government, local governments, hospitals, universities and other institutions that rely, in some way or another, on payments from the federal government. If Medicaid stops paying its bills, all the hospitals that rely on Medicaid’s payments become less creditworthy. If we stop funding Pell grants, then all the universities that enroll students who pay using financial aid become less creditworthy. And since the federal government passes one-fifth of its revenues through to the states, and the states pass those revenues through to cities, if the federal government stops paying its bills, all states and all cities are suddenly in worse financial shape, which will make it harder for them to get loans.

And then there’s everything else. Mortgages. Credit cards. Loans that businesses take out to expand. Much of the debt in the American economy, and in fact globally, is “benchmarked” to Treasury debt. When your bank quotes you a mortgage rate, the calculation begins with the rate on 10-year treasuries and then adds premiums for various types of risk specific to you and your area on top of that. “There’s a whole credit structure,” says Pete Davis, president of Davis Capital Investment Ideas. “Think of it as roads and bridges, but it’s finance, it’s all connected, and it’s all on top of treasuries. Your CD at a bank, your credit card interest rates, your car loans, your mortgages — that’s all built on Treasury rates. So when you shake the basis of it, everything on top of it shakes, too.”

The 2008 economic crisis wasn’t started by a nuclear bomb detonating in New York, or a campaign to sabotage the country’s factories, or a plague that struck our able-bodied young males. Rather, investors bought a lot of debt based on subprime mortgages. They performed some tricky financial wizardry that they thought made the debt low-risk. They found out they were wrong. And then, because the players in the financial system no longer knew how much money anyone had, the credit markets froze and the economy crashed.

Now imagine that happening, not with the housing market, but with the government of the United States of America. The cornerstone of the global financial economy is the idea that Treasuries are risk-free. If they’re not, then like in the financial crisis, no one knows how much money anyone who holds treasuries has. But they also don’t know how much money anyone who depends on the federal government — be they businesses or individuals — holds.

This is how a default gets into the rest of the economy: It takes everything the financial markets thought they could know and rely on and upends it. It then shuts off credit, or makes it prohibitively expensive, for nearly every participant in the economy, from states and cities to hospitals and universities to homebuyers and credit-card applicants. That, in turn, freezes all of their activity, which destabilizes everyone who relies on them, which then destabilizes financial markets further, and so on.

It was one thing to have forgotten that this sort of thing could happen in 2006, when America hadn’t seen it for 70 years. But we just went through it. And if we go through it again, the Federal Reserve, which has pushed interest rates as low as they can go, and Congress, which has vastly expanded the deficit, have a lot less ammunition left for a response.

Are we likely to get to that point? No, of course not. But between here and there are worlds where the economy doesn’t crash, but because the federal government panics the market, interest rates rise and the economy slows. In a recovery this weak, that would be a disaster. And it would be entirely of our own making.

By: Ezra Klein, The Washington Post, July 15, 2011

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July 17, 2011 Posted by | Banks, Budget, Businesses, Congress, Conservatives, Consumer Credit, Consumers, Debt Ceiling, Deficits, Democrats, Economic Recovery, Economy, Financial Institutions, GOP, Government, Government Shut Down, Ideologues, Ideology, Lawmakers, Medicaid, Middle Class, Politics, Public, Republicans, Right Wing, States | , , , , , , , , , , , , , , , , | Leave a comment

Getting to Crazy: The Culmination Of A GOP Process

There aren’t many positive aspects to the looming possibility of a U.S. debt default. But there has been, I have to admit, an element of comic relief — of the black-humor variety — in the spectacle of so many people who have been in denial suddenly waking up and smelling the crazy.

A number of commentators seem shocked at how unreasonable Republicans are being. “Has the G.O.P. gone insane?” they ask.

Why, yes, it has. But this isn’t something that just happened, it’s the culmination of a process that has been going on for decades. Anyone surprised by the extremism and irresponsibility now on display either hasn’t been paying attention, or has been deliberately turning a blind eye.

And may I say to those suddenly agonizing over the mental health of one of our two major parties: People like you bear some responsibility for that party’s current state.

Let’s talk for a minute about what Republican leaders are rejecting.

President Obama has made it clear that he’s willing to sign on to a deficit-reduction deal that consists overwhelmingly of spending cuts, and includes draconian cuts in key social programs, up to and including a rise in the age of Medicare eligibility. These are extraordinary concessions. As The Times’s Nate Silver points out, the president has offered deals that are far to the right of what the average American voter prefers — in fact, if anything, they’re a bit to the right of what the average Republican voter prefers!

Yet Republicans are saying no. Indeed, they’re threatening to force a U.S. default, and create an economic crisis, unless they get a completely one-sided deal. And this was entirely predictable.

First of all, the modern G.O.P. fundamentally does not accept the legitimacy of a Democratic presidency — any Democratic presidency. We saw that under Bill Clinton, and we saw it again as soon as Mr. Obama took office.

As a result, Republicans are automatically against anything the president wants, even if they have supported similar proposals in the past. Mitt Romney’s health care plan became a tyrannical assault on American freedom when put in place by that man in the White House. And the same logic applies to the proposed debt deals.

Put it this way: If a Republican president had managed to extract the kind of concessions on Medicare and Social Security that Mr. Obama is offering, it would have been considered a conservative triumph. But when those concessions come attached to minor increases in revenue, and more important, when they come from a Democratic president, the proposals become unacceptable plans to tax the life out of the U.S. economy.

Beyond that, voodoo economics has taken over the G.O.P.

Supply-side voodoo — which claims that tax cuts pay for themselves and/or that any rise in taxes would lead to economic collapse — has been a powerful force within the G.O.P. ever since Ronald Reagan embraced the concept of the Laffer curve. But the voodoo used to be contained. Reagan himself enacted significant tax increases, offsetting to a considerable extent his initial cuts.

And even the administration of former President George W. Bush refrained from making extravagant claims about tax-cut magic, at least in part for fear that making such claims would raise questions about the administration’s seriousness.

Recently, however, all restraint has vanished — indeed, it has been driven out of the party. Last year Mitch McConnell, the Senate minority leader, asserted that the Bush tax cuts actually increased revenue — a claim completely at odds with the evidence — and also declared that this was “the view of virtually every Republican on that subject.” And it’s true: even Mr. Romney, widely regarded as the most sensible of the contenders for the 2012 presidential nomination, has endorsed the view that tax cuts can actually reduce the deficit.

Which brings me to the culpability of those who are only now facing up to the G.O.P.’s craziness.

Here’s the point: those within the G.O.P. who had misgivings about the embrace of tax-cut fanaticism might have made a stronger stand if there had been any indication that such fanaticism came with a price, if outsiders had been willing to condemn those who took irresponsible positions.

But there has been no such price. Mr. Bush squandered the surplus of the late Clinton years, yet prominent pundits pretend that the two parties share equal blame for our debt problems. Paul Ryan, the chairman of the House Budget Committee, proposed a supposed deficit-reduction plan that included huge tax cuts for corporations and the wealthy, then received an award for fiscal responsibility.

So there has been no pressure on the G.O.P. to show any kind of responsibility, or even rationality — and sure enough, it has gone off the deep end. If you’re surprised, that means that you were part of the problem.

By: Paul Krugman, Op-Ed Writer, The New York Times, July 14, 2011

July 16, 2011 Posted by | Budget, Class Warfare, Congress, Conservatives, Corporations, Debt Ceiling, Deficits, Democrats, Economic Recovery, Economy, Elections, Freedom, GOP, Government, Government Shut Down, Health Care, Ideologues, Ideology, Journalists, Media, Middle Class, Politics, President Obama, Press, Pundits, Republicans, Right Wing, Taxes, Voters | , , , , , , , , , , , , , | Leave a comment

Eric Cantor’s Slick Upper Lip: “I Want What I Want When I Want it”

Eric Cantor has perfected the strategic sneer.

It comes, frequently, when he answers a reporter’s question about something President Obama has said: The House majority leader’s lip curls up on the left side and a look of disgust washes over his face. This week, he has been coupling the sneer with lines such as:

“How in the world can you even accept that notion?”

And, “That is laughable on its face.”

And, “That doesn’t make sense. . . . That again is just nonsensical.”

And, “Come on — let us think about this.”

Cantor, who is establishing himself as the lead GOP negotiator with the White House as the Aug. 2 default deadline approaches, is answering calls for compromise with contempt. He shook his fist during a news conference Tuesday and said that Obama’s thinking is “unfathomable to me.” To Obama’s complaint that the wealthy are not sharing in the budget sacrifice, he scoffed: “There is plenty of so-called shared sacrifice.” Asked about Obama’s belief that people like him should pay more in taxes, Cantor retorts: “You know what? He can write a check any time he wants.”

He draws out the vowels in a style that is part southern, part smarty-pants. Had young Cantor spoken like this at his prep school in Richmond, the bigger boys may well have wiped that sneer off his face. Yet even then, Cantor was accustomed to having things his way. According to Cantor’s hometown Richmond Times-Dispatch, the quotation he chose to accompany his yearbook photo was “I want what I want when I want it.”

What Cantor wants now is power — and he is prepared to risk the full faith and credit of the United States to get it. In a primacy struggle with House Speaker John Boehner, he has done a deft job of aligning himself with Tea Party House members in opposition to any meaningful deal to resolve the debt. If the U.S. government defaults, it will have much to do with Cantor.

He pulled out of debt-limit talks with Vice President Biden. He shot down the outline of a compromise that Boehner attempted to negotiate. Now Cantor has essentially taken over talks with the White House, and he has tamped down any hint of conciliation.

On Monday, Boehner hinted that he could accept a tax-reform deal that brought “additional revenues to the federal government” — and his spokesman confirmed that the proposal would be “scored” by the Congressional Budget Office as increasing tax revenue. But Cantor was having none of it: “We are not raising taxes, so it has to be net revenue neutral.”

Cantor’s aides say he is merely reflecting his caucus. But Cantor, a veteran of a decade in the Capitol, surely knows that he is jettisoning the last chance in the next couple of years to make a serious dent in the national debt. The White House has so far offered up a tantalizing array of concessions — $4 trillion in budget cuts and overhauls of Medicare, Medicaid and Social Security – but Cantor has yet to offer anything but sneers.

He flashed the trademark facial expression even before taking his seat at a Monday news conference. Asked whether he would offer any concessions, Cantor responded by saying that the cuts he demanded from the White House were in fact concessions by him, too. “Nobody relishes the opportunity to go and cut these programs,” said the creator of the YouCut Web site that made budget-cutting into an online game. Cantor further said that it was a concession merely to avoid a government default.

The search for a Cantor concession continued. “In terms of shared sacrifice across the country, do you see that one as necessary?”

Cantor swung his arm over his chair back and raised his upper lip. “I think behind this notion of ‘We want shared sacrifice’ that they continue to say means, ‘We want to raise taxes,’ ” he said.

Claiming that there have been “concessions made already” by his side, Cantor was pressed to name some of them. “I don’t want to get into specifics now,” he said.

Leaving a House Republican caucus meeting Tuesday morning, Cantor approached the microphones, flashed the cameras a good-morning sneer and demanded to know “why in the world” Obama wants to increase taxes.

NBC’s Luke Russert asked what “sacred cows” Cantor would be willing to sacrifice. Cantor repeated his denunciation of Obama’s tax policy.

“Where do the Republicans feel pain here, though?” Russert persisted.

After a long and contemptuous day, the majority leader probably feels it most in his upper lip.

 

By: Dana Milbank, Opinion Writer, The Washington Post, July 12, 2011

July 13, 2011 Posted by | Congress, Conservatives, Debt Ceiling, Democracy, Economic Recovery, Economy, GOP, Government, Government Shut Down, Ideologues, Ideology, Politics, Republicans, Right Wing, Tax Loopholes, Taxes, Unemployed, Wealthy | , , , , , , , , | Leave a comment